We have made major progress in the characterization of two phosphorylation sites for basophilic kinases on key lymphocyte proteins: SHP-1 is an abundant tyrosine phosphatase in hematopoietic cells that downregulates T-cell receptor signaling. We have demonstrated rapid T cell receptor-mediated SHP-1 S591 phosphorylation regulates SHP-1 cellular localization and phosphatase activity. The WIP WASP complex is important in regulating actin polymerization and regulation of IL-2 transcription in T-cells. Our findings contradict a prevailing conceptual model of TCR-induced WIP-WASP dissociation proposed to occur via phosphorylation of WIP-S488 by a basophilic kinase. We show that phosphorylation does not regulate dissociation but instead the WIP-WASP complex mediates TCR-induced NFAT activation without dissociation. PKC-theta is a membrane-proximal basophilic kinase expressed in T-cells which participates in TCR-mediated signal transduction. To better understand the function of PKC-theta we made transgenic mice expressing the PKC-theta kinase domain in T-lymphocytes. Constructs were designed with the ARIAD regulated heterodimerization strategy, to allow regulated signaling by drug (rapalog)-induced translocation of PKC-theta kinase domain to the membrane. Unexpectedly, without drug induction, mice expressing moderate amounts of the PKC-theta kinase domain (E3 line) manifested gross phenotypes that included dermatitis (tail/ears/feet), keratitis, pleural effusion and small size for age. Microscopic changes included dermatitis; pancreatic atrophy and myocardial changes with variable numbers of lymphocytes. Severe runting and illness requiring euthanasia were likely secondary to destruction of the exocrine pancreas and myocardial lesions. We investigated the underlying mechanism for these apparent autoimmune processes. We found that thymocytes development was normal in the transgenic mice. Both in the E3 line and a lower-expressing line (D6) we found a modest increase of T cells with activation marker (CD25, CD69) and T cells with memory phenotype (CD45RBloCD44hi). In both lines, the B cell number was increased, along with markedly elevated levels of serum IgE. We hypothesized that the transgenic expression of PKC-theta kinase domain resulted in abnormal activation of autoreactive T cells in the mice, causing autoimmunity. Consistent with this hypothesis, preliminary studies have found that the CD4 T cells from the mice had a lower activation threshold as determined by CD69 expression after stimulation with graded amount of CD3 Ab. When freshly isolated peripheral T cells were stimulated, those from the PKC-theta kinase domain transgenics produced much more cytokine (IFN-gamma, IL-4, IL-2) than control and they proliferated better. Treg cell function is under investigation and may be abnormal. Since PKC-theta has been shown before to be involved in CD28 signaling pathway, we are exploring the possibility that expression of a constitutively active PKC-theta partially bypassed CD28 signal, resulting in lowering of activation threshold